Mans Söderbom (University of Gothenburg)

"Social networks and the diffusion of a new mobile money technology in Rwanda"

 Monique van den Boogaart, Marcel Fafchamps and Måns Söderbom

Abstract

We study mechanisms of social interaction in the context of the diffusion of a new mobile money technology in Rwanda. We develop a theoretical model of social interactions which combines contagion, social learning and network externalities. We show how these different mechanisms lead to different predictions regarding the relationship between the characteristics of the social network and patterns of adoption. Using weekly panel data on all phone based activity 2005-2008 and all transfers of mobile phone airtime between September 2006 and July 2008 in Rwanda, we estimate fixed effects logit models of adoption. We find that the adoption of neighbours impacts the likelihood of own adoption, and that neighbours play an important role even when the individual is informed about the technology. We also estimate a fully structural model, which enables us to distinguish between social interactions mechanisms directly. The structural estimates confirm that peers' behavioir impacts own decisions even conditional on individuals being informed about the technology. Spreading information is thus just one of several roles played by social interactions. We conclude that network effects and social learning are important for the decision to adopt.